Housing Ladder for U.S. Middle Class Is Broken…Homeownership Now Requires Spending Over Half of Income

The 'American Dream' of an average salary worker owning a home is in jeopardy. In the 1980s, it was still possible to support a family and buy a house with an ordinary job, but now over 70% of U.S. metropolitan areas have become too expensive for the middle class to afford a home.

Currently, a median-income household must spend nearly half of its income (43%) on housing costs to purchase a median-priced home, a figure that has more than doubled from six years ago (28%). Income growth has failed to keep pace with rising housing prices over the past few decades, a gap exacerbated by the COVID-19 pandemic. The median age of first-time homebuyers has risen from 29, which was the norm for most of the 1980s, to 40 today.

As asset formation is delayed due to the burden of housing costs, long-term financial stability is being undermined. With housing no longer functioning as a safety net or a means of wealth accumulation for the next generation, American society is facing a fundamental reflection on the meaning of success and the conditions for a prosperous life.